Synopsys Is A Smart AI Bet, Analysts Say
Wall Street analysts rerated Synopsys, Inc (NASDAQ:SNPS) after it reported its quarterly results on Wednesday.
• Synopsys stock is trading in a tight range. What should traders watch with SNPS?
Synopsys reported stronger-than-expected fourth-quarter results, posting adjusted earnings of $2.90 per share and revenue of $2.26 billion, both slightly above analyst estimates.
For fiscal 2026, Synopsys projects adjusted EPS of $14.32 to $14.40 and revenue between $9.56 billion and $9.66 billion, well ahead of consensus expectations.
Also Read: Synopsys To Cut 2,000 Jobs After $35 Billion Ansys Deal, Shifts Focus To Faster-Growing Businesses
Analysts Boost Ratings and Forecasts
BofA Securities analyst Vivek Arya upgraded Synopsys from Neutral to Buy and raised the price target from $500 to $560.
Rosenblatt analyst Blair Abernethy maintained Synopsys with a Buy and a $560 price target.
JPMorgan analyst Harlan Sur reiterated Synopsys with an Overweight and raised the price target from $600 to $650.
Key Takeaways From Analyst Commentary
BofA Securities: Arya sees Synopsys as an attractive, lower-beta way to gain AI exposure in 2026.
The analyst noted the company has reduced risk around China and Intel Corp (NASDAQ:INTC) revenue while benefiting from strong momentum at Ansys, setting up potential stock upside and EPS beats over the next year.
He still prefers Cadence Design Systems, Inc (NASDAQ:CDNS) as his top pick in electronic design automation (EDA) because of its stronger organic growth, share-gain potential, deeper Taiwan Semiconductor Manufacturing Company Ltd (NYSE:TSM) exposure, higher free-cash-flow margins and cleaner balance sheet.
Arya highlighted several potential EPS drivers, including Intel winning more foundry customers, stronger demand for joint Synopsys-Ansys products, expanded opportunities in physical AI and robotics, and a possible recovery in China.
Arya projected first-quarter revenue of $2.39 billion and adjusted EPS of $3.55. He expects fiscal revenue of $9.61 billion and adjusted EPS of $14.37.
Rosenblatt: Abernethy said Synopsys delivered fourth-quarter revenue slightly above expectations, powered by a full quarter of contribution from Ansys, which grew about 10% year-over-year.
The analyst noted Intellectual Property (IP) remained a weak spot, falling to just 18% of total revenue due to earlier product missteps, China export restrictions and foundry-related delays.
Organically, revenue declined about 3% year-over-year, while EDA grew roughly 6% in the quarter and 7% for fiscal 2025, held back by an 18% revenue drop in China.
Abernethy said fiscal 2026 will bring modest IP growth weighted toward the back half, EDA growth near 8%, and around 10% organic growth at Ansys.
Abernethy projected first-quarter revenue of $2.39 billion and adjusted EPS of $3.55. He expects fiscal revenue of $9.64 billion and adjusted EPS of $14.35.
JPMorgan: Sur said Synopsys reported mostly in-line results but showed upside in margins and backlog after Ansys contributed its first full quarter.
The analyst called fiscal 2026 a "transition year" with guidance roughly in line or slightly conservative, implying high-single-digit growth for core EDA and low- to mid-single-digit growth for Design IP once divestitures and Ansys revenue are stripped out.
He highlighted a $11.4 billion backlog, driven by hardware strength, leading-edge software and large IP programs, despite China headwinds and Intel's shifting roadmap.
Sur projected first-quarter revenue of $2.39 billion and adjusted EPS of $3.55. He expects fiscal revenue of $9.65 billion and adjusted EPS of $14.39.
SNPS Price Action: Synopsys stock traded lower by 0.59% at $473.03 at publication on Thursday.
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